Fua Cam Lu vs Yap Fauco and Yap Singco 74 Phil 287, G.R. No. L-48797, July 30, 1943
Subject: Obligations and Contracts
FACTS
By
virtue of a judgment for P1,538.04 which Fua obtained against Yap, a writ of
execution was issued in pursuance of which a parcel of land belonging to Yap
was levied upon and its sale at public auction duly advertised. The sale was,
however, suspended as a result of an agreement between the parties, by the
terms of which the obligation under the judgment was reduced to P1,200 payable
in four installments, and to secure the payment of this amount, the land levied
upon with its improvement was mortgaged to appellee with the condition that in
the event of appellants' default in the payment of any installment, they would
pay 10 percent of any unpaid balance as attorney's fees as well as the
difference between the full judgment credit and the reduced amount thus agreed.
Appellants failed to comply with the terms of the settlement, whereupon,
appellee sought the execution of the judgment, and by virtue of an alias writ
of execution, the land was sold at public auction to appellee and a final deed
was executed in his favor. Appellants refused, however, to vacate the land and
to recognize appellee's title thereto; hence, the latter instituted the present
action for recovery.
ISSUE
Whether
or not there was extinctive novation.
RULING
Yes, there was
extinctive novation, in view of the incompatibility between the judgment and
the contract, considering the fact that the judgment was payable at once, was
unsecured, and contained a stipulation for attorney’s fees.
In this case, the
contract was NOT a mere extension of the period within which to pay the
judgment because the contract itself stated that the promise to pay the P1,200
was precisely made as a settlement of said judgment. There would have been no
settlement had it not been implicitly agreed that the obligation in the
judgment was considered by both parties as already extinguished.
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